NBA rights deal highlights importance of live sports and impact of streaming
The US National Basketball Association (NBA) has agreed a new rights deal with Disney, Comcast and Amazon that will see the three entertainment giants collectively pay in excess of $76bn over 11 years to broadcast and stream league games.
Warner Bros Discovery, which currently maintains the rights alongside Disney, matched the offer but its bid was rejected by the NBA. Warner Bros Discovery has suggested it will attempt a legal battle over the debacle, alleging the NBA has “misinterpreted” its contractual rights.
Games will be broadcast across Disney and Comcast’s linear properties, as well as streamed on their respective services and Amazon Prime Video. Disney’s ABC will air the finals, while conference championships will be split between Disney’s ESPN, Comcast’s NBC and Prime Video.
Under the new agreement, Disney will pay $2.6bn per year (up 86% from its previous deal’s cost of $1.4bn). Comcast’s NBCUniversal will pay $2.5bn and Amazon $1.8bn per year. In total, the NBA will earn nearly $7bn per year— almost triple the current rights deal’s total ($2.6bn).
The new deal values the NBA’s TV rights beneath that of the National Football League (NFL) at $10bn annually, but it is significantly more than Major League Baseball ($1.9bn annually) and the National Hockey League ($625m annually).
In addition, the NBA negotiated the rights deal for airing WNBA games, which have exploded in popularity thanks to Indiana Fever star Caitlin Clark. The WNBA is set to receive $2.2bn over 11 years.
Analysis: Streaming drives rights prices up
The significant jump in price comes even as NBA TV viewership has declined in recent years, particularly among primetime audiences.
Nevertheless, the higher cost reveals both the increased value of live sports to broadcasters and the impact streaming has had on driving up the price of sports licensing deals.
Sports and breaking news remain the two most reliable verticals for linear TV to continue to drive audiences. And with deals locked up for multiple years, revenues from carrying league games are effectively guaranteed well in advance.
For advertisers, live sports is particularly valuable because it offers a dependable brand-safe environment relative to live news — an argument that is increasingly being made by broadcasters such as NBCUniversal, which dedicated an evening event to live sports at Cannes Lions this summer.
Apart from live sports’ increased importance, however, is streaming companies’ capacity to bid up the cost of rights.
In particular, Amazon and Apple have huge coffers that can allow them to spend big, even if the costs outweigh profitability in the short run. For big tech players, live sports can work as a loss leader that helps acquire more customers into their respective ecosystems (ie. Prime retail membership and Apple’s various subscription services).
Traditional TV broadcasters, already suffering from the streaming wars, may struggle to compete as costs balloon. Thus far, they’ve still been keen to match high-spending streamers, but the price of rights has continued to rise due to an increase in competitors vying for at least partial rights.
Fractured viewership
With streaming companies increasingly grabbing pieces of the sport rights pie, viewers will be in for a worse viewing experience as the league’s slate becomes fragmented.
Fans wanting to watch their favourite team may find themselves being blocked from viewing lest they have an Amazon Prime Video account. Given sports fans will also need an Apple TV+ account to watch Friday night MLB games, as well as both Netflix and Amazon Prime Video accounts to watch some NFL games, it is not implausible that they will feel squeezed.
Illegal streaming is thus, unsurprisingly, on the rise. In the UK, the Premier League’s fractured rights deal, which shares games between Sky Sports, Amazon Prime Video and TNT Sports, has led to a sharp uptick in illegal streaming viewership, according to YouGov.
The NBA — and other sports leagues — will need to balance their profit-seeking desires with long-term concerns around brand dilution and increased inaccessibility for viewers.
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